The objective of this study was to improve the efficiency of growth and lactation performance of dairy heifers fed for a stair-step growth pattern. Twenty-four young Holstein heifers were randomly assigned to either control or test groups. The test group was fed according to a schedule of 3, 2, 4, 2, 5 and 2 mo in which feed intake was alternately 20% below or 25% above requirements. Heifers that were subjected to the stair-step growth pattern gained more body weight and consumed less dry matter, resulting in improved efficiency of growth compared with that of controls (7.8% vs. 8.3%). First estrus, first conception, gestation period, services per conception, and calving difficulty (dystocia) were not affected by stair-step growth. Concentration of growth hormone in blood serum was elevated during feed restriction for the test heifers; however, during refeeding, growth hormone was decreased compared with that in the blood serum of control heifers. Mammary tissues obtained by biopsy from heifers in middle and late pregnancy were used for chemical composition analysis. Stair-step growth increased DNA, RNA, protein, the ratio of RNA to DNA, and the ratio of protein to DNA. Lipid decreased in the mammary tissue of test heifers in late pregnancy (9.5 mo). Heifers in the test group yielded approximately 9% more milk than did heifers in the control group. These results indicate that compensatory growth can contribute to the improvement of growth efficiency and lactation performance.